And so Miranda’s Aunt Natalie’s story has begun. Even though we’re in episode 1 of this journey, the astute (and even not-so-astute) listener will probably notice that elements of Aunt Natalie’s tale take some liberties with what we usually think of as the “truth,” while others — like the absence of odors in Antarctica — seem over-the-top but are surprisingly accurate. We also learned that Miranda has some surprisingly precocious business insights for a twelve-year-old. Her plans to become an influencer may not pan out, but she has the potential for a bright future in the Consumer Product (CP) industry if she chooses that route. As we all know, it’s good to have a Plan B.
Miranda’s observation that the direct-to-consumer (D2C) paradigm is “fire” is spot on. Even before the pandemic delivered a body blow to traditional brick-and-mortar retail, the CP and Retail industries were undergoing major disruption. Brands were finding that they could no longer differentiate themselves solely on quality, price, value, or convenience in an increasingly crowded and competitive market. Consumers gained more clout as their choices increased and they acquired better visibility into pricing, availability, and product reviews. Meanwhile, the role of physical stores was evolving toward omnichannel fulfillment centers and product display venues.
Natalie’s awareness of the growing success of the D2C model could be partly generational. Marketers know that millennials’ and Gen Z’s buying and consumption habits differ significantly from those of older generations—especially those who grew up in the heyday of department stores and suburban malls. As digital natives, their default option is shopping and buying online. They’re less brand loyal and have fragmented brand preferences. They’re more likely to buy from digital-native consumer brands than traditional CP companies and established retailers. But the appeal of the B2C model crosses generational lines. Some 90% of consumers say they would rather buy directly from a brand if they could. Another 76% say that they expect companies to understand their needs and expectations (in other words, they want a personalized experience). And 71% say they want a consistent experience across channels.
Delivering on those expectations is a tall order. How can CP and Retail companies do it?
Let’s take a quick look at each.
Meet consumers where they really are
The D2C model isn’t a static channel. It’s continually evolving with new technologies and changing customer demands. Online consumers can be “always-on.” They can shop anywhere, anytime, across multiple devices. So, the digital consumer may be hard to pin down, but the D2C channel gives brands new opportunities to understand customers’ and intentions and design engaging experiences. It provides a data- and insight-rich environment to help companies develop new products, pioneer innovative ways of building a brand, and monitor and respond to consumer feedback in real time.
Capture demand by optimizing consumer intent
There’s more to D2C than simply shifting marketing spend from traditional to digital channels. Connecting with consumers in a digital-first world requires marketers to find new ways to drive demand along the path to purchase. It’s critical to inspire consumers in their moments of discovery—in the same way an in-person shopping experience could lead to a serendipitous encounter with something fresh and new. To do this, marketers need to engage with consumers early in the moments of discovery rather than relying on the last signal of intent prior to the transaction. This takes a more flexible approach to the path-to-purchase, using new methods and channels such as social media to build awareness, create excitement, and promote long-term loyalty.
Build relationships with consumers beyond first sales
D2C consumers are looking for “moments that matter.” They want experiences that evoke positive emotions, which can sometimes be a challenge to accomplish online. Social engagement, closed-loop feedback, and two-way conversations — all conducted via digital — are the building blocks of these experiences. They turn one-time buyers into repeat customers, maximize the value of the customer relationship over time, and build the loyalty that turns satisfied purchasers into passionate brand advocates.
It’s too early to predict how many of the changes wrought by the pandemic will become standard practice once the dust settles. However, the D2C model was gaining traction well before lockdowns turned us all into online shoppers. And SAP led the way by helping CP companies make the smartest use of their most strategic assets — like talent, inventory, and innovation — to become D2C leaders. For more on how SAP solutions can help you tap the potential of the D2C market, visit inspirethefuture.com/consumer-products. And to gauge your progress toward becoming an intelligent enterprise, take a few minutes to complete our self-assessment.
SAP and Capgemini:
Partnering to help CP companies become intelligent enterprises
Consumers want direct engagement with brands, and they want it now. That engagement will increasingly be personalized, intelligent – and digital.
In conjunction with SAP, Capgemini is helping consumer products companies master these market shifts and tech-triggered trends. Their team of consumer products experts works with you to make your vision for an intelligent enterprise a reality.